Canadian real estate: Thinking outside the box
While much of the world was reeling from the 2007/8 global financial crisis, Canada was proving itself to be comparatively robust.

Toronto and Vancouver
Explaining the spiralling prices in these two cities, Phil Soper says, "They have the lion's share of immigration and the lion's share of current economic growth, thanks to goods and services exports having really picked up with the US recovery."In addition, Vancouver has oceans and mountains and Toronto has legislated green belt and the Great Lakes, so these cities, while very large, are physically constrained in terms of their growth. So you're finding supply shortages and spikes in prices."Indeed, the rise in Canadian house prices is continuing to outpace rises in incomes, especially in the high- growth areas of Toronto and Vancouver. According to PwC, one result of this is that more and more people are choosing to rent. In some cases, this is even occurring as a permanent choice, and some retired people are opting to rent a similar property after they sell, rather than buy a smaller home.Developers are looking to match this trend with purpose- built rental properties, though PwC notes that some of its interviewees expressed concern that the supply of such units in Toronto might surpass demand. Still, luxury apartments may become increasingly popular with retirees and Baby Boomers.This, of course, is having an impact on expat rentals. "Often, when expatriates come to Canada on assignment, they have specific types of rental property in mind, particularly executive single-family homes and high-end condo apartments in the most desirable and established neighbourhoods," Sandra Cairns says."Naturally, supply and demand dictate rental prices on all new leases anywhere in Canada. In markets such as Vancouver and Toronto, demand is typically greater than supply. In the most sought-after neighbourhoods, bidding wars and multiple rental offers frequently drive up rents."
Urban living
The trend towards urban densification continues, but the pattern may begin to shift over the longer term.It's becoming increasingly difficult for developers to build affordable housing in urban centres, partly because of the very policies designed to promote urban density, according to PwC. Land prices are on the rise, thanks in no small part to green-belt legislation in Ontario and British Columbia.Additionally, long approval processes and high development charges, with the growing cost of construction, are driving up costs. Some argue that this could lead to changes in urbanisation trends, and the expansion of city transit systems could make buying affordable houses away from urban cores more viable.Oil-price collapseMeanwhile, in Alberta, the province worst hit by the oil-price collapse, the outlook is much more subdued on the sales front. "What we saw in the big cities in Alberta in 2015 were stable home prices but significant drops in unit sales," says Phil Soper."This means is that people generally feel that the long-term economic prospects in the province remain good, and they're unwilling to sell their home at a discount.
"But there's no sense putting their home on the market, because buyers are feeling risk-averse. They feel prices could drop. So there's this gap between seller and buyer expectations."In our monthly figures, we're seeing the first material decreases in property prices since the oil crisis, and it's taken about a year for those to show up. My expectation is that we'll see softness in prices, most predominantly in Fort McMurray, secondly in Calgary, then, to a much lesser extent, in the smaller cities – Edmonton, Red Deer, Lethbridge – where the economies are more balanced."That, of course, means a happier picture for those wishing to rent. "According to the CMHC's Spring Market Report, released in mid-June, Calgary's vacancy rate was 0.2 per cent," says Sandra Cairns. "However, with the additional layoffs in the oil and gas industry this past autumn, indications are that vacancy rates will continue to increase into the spring and summer of 2016."The types of property most affected by this change are high-end, single-family homes and executive rentals. As more rentals have become available, landlords are offering incentives they haven't offered in many years, such as a month's free rent on new leases."
The future of assignments
In terms of mobility, Sandra Cairns notes a couple of emerging trends. "Within the last year, we have seen a significant increase in the number of short-term assignments, where the employee moves on a temporary basis. Their assignment typically lasts between six months and two years, while the family stays in their home country."Due to this growing trend, there has been an increase in authorisations for furnished condo apartments, town homes, and single-family homes. We believe this trend will continue into 2016."There's a trend for a very different type of property, far from the cities, however."Canada has several small towns because it is such a large country with a highly natural-resource-based economy, and this leads to relocations in especially remote locations," says Sandra Cairns. "Finding the right rental property in a larger city can be challenging, but finding rentals in a town where the population is 50,000 or fewer, with little or no availability of suitable rental properties, is equally difficult."Providers and clients have begun to think outside the box, and have come up with creative solutions. Prefabricated and 'tiny' houses on corporate-leased land may become the new normal for small-town relocations."
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